Amid a homebuying slump, a report from the California Association of Realtors found housing affordability improved for all ethnic makeups of buyers except Black households in 2025.
The index, which began its annual tally in 2019, shows 29% of Asian households could afford a median-priced home, followed by 23% of White households. Meanwhile, only 11% of Black households and 11% of Hispanic/Latino households had the same ability. The difference in housing affordability between Black households and the overall population in California widened to 8.7% last year from 8.3% in 2024.
The findings came as California home prices took their steepest price dip since 2023 and statewide median incomes grew by $10,000.
CAR economist Oscar Wei said the affordability index is determined by home prices, interest rates and household income.
See more: California Realtors apologize for history of housing discrimination
Black households in particular have struggled for years to join the ranks of homeowners in large part because of the real estate industry. CAR and the National Association of Realtors each issued public apologies in recent years for their history of supporting discriminatory housing policies, such as opposing neighborhood integration in fear of reduced property values and endorsing “redlining” tactics that denied people of color mortgages, loans or insurance.
While affordability among both Black and Latino buyers last year rose 10% from 2024, CAR underscored that the widening gap with other ethnicities was due to wage inequities and persistent barriers to credit access. According to the Public Policy Institute of California, the state’s lowest-income families tend to be Black and Latino and are disproportionately headed by women, young adults under 25, and those without college degrees.
Wei said that a drop in interest rates might help homebuyers but added that persistently low supply remains an obstacle.
He pointed to the California Middle-Class Homeownership and Family Home Construction Act of 2026, a CAR-backed $25 billion voter initiative on the November ballot. The initiative seeks to boost construction for 190,000 new homes as another way to improve ownership across all groups.
“It would help middle income households be able to obtain a loan or down payment and that should allow them to actually get into a home,” Wei said.
See more: California homebuying falls below Great Recession lows
He also said supply needs to improve by way of increased building locally, statewide or nationwide.
The building-friendly 21st Century ROAD to Housing Act was passed by the U.S. Senate in March but has stalled due to its provisions on institutional investors. The proposal, introduced in late 2025, would exempt certain housing construction methods from environmental reviews, exclude veteran disability benefits from income thresholds impeding housing eligibility, tighten temperature compliance in public housing, loosen manufactured home-building regulations and authorize HUD review housing counseling organizations.
This year’s Iran war, marked by blockade-driven oil supply issues, has triggered a rise in global inflation and halted interest rate cuts. Wei said those developments also will have an impact on homebuying.
“There is hope on the horizon,” Wei said. “If interest rates start actually coming down in the second half of the year, we will likely see a little more supply.”